TUPE update

Whilst some of us may have been taking some time out and relaxing over the summer holidays, the Employment Appeal Tribunal has been busy shining a light into some of the darker corners of the TUPE Regulations. Sarah Lamont rounds-up the recent run of TUPE cases.

Whilst some of us may have been taking some time out and
relaxing over the summer holidays, the Employment Appeal Tribunal
has been busy shining a light into some of the darker corners of
the TUPE Regulations. Sarah Lamont rounds-up the recent run of TUPE
cases.

Relocation, relocation, relocation

In August, the Employment Appeal Tribunal (EAT) provided further
guidance on the question of whether an employee is entitled to
resign and claim constructive dismissal if their workplace is
relocated following a TUPE transfer. In Cetinsoy v London United Busways Limited bus
drivers were TUPE transferred to a new service provider, which
required them to work out of a new depot, 3.5 miles from the
original depot. Extra travel time to get to the new depot was
around 30 minutes – 1 hour. The EAT said that this was not a
substantial change to the drivers' material detriment, entitling
them to claim that they had been constructively dismissed or
dismissed for the purposes of regulation 4(9) of TUPE 2006.
The EAT noted that the evaluation of whether a change is a material
detriment is a question of fact for a tribunal to decide and the
EAT found that the employment tribunal had properly reached its
view, taking into account

the lay members' experience of employment practice; and

the fact that the bus drivers were subject to a contractual
mobility clause which allowed their employer to require them to
work at other depots. Although the depot to which they were
relocated following the TUPE transfer was not mentioned in the
clause, the new depot was no more difficult to reach than the other
depots which were specifically mentioned.

The facts in this case are very similar to a case called
Abellio London Ltd (Formerly Travel London Ltd) v
Musse and others (2012), where a requirement for bus drivers to
relocate 6 miles was held to be a substantial change to the
drivers' material detriment. However, the EAT noted that each case
must be considered on its own facts; cases with similar facts will
not necessarily result in the same conclusion.

Note that this case was decided under 'old' TUPE. Under
the amended 2014 TUPE Regulations, relocation on a TUPE transfer
has been made a specific valid reason for dismissal, which may
allow employers greater flexibility. However, we have yet to
see how tribunals will apply this change. Please click here for a summary of the changes
introduced by the 2014 amendments to TUPE.

The second generation game

A key provision of TUPE is that, in order for a service
provision change to take place, the outgoing and incoming
contractors must have been engaged by the same client. This can
raise some tricky questions as to whether TUPE applies to second
generation outsourcing, where services are being commissioned by
different contractors for the benefit of the same underlying
client. This was the case in Horizon Security Services Limited v (1) Ndeze and
(2) the PCS Group where the London Borough of Waltham Forest
owned an office complex, which was managed on its behalf by
Workspace Plc, which in turn contracted security services through
PCS Group. The site was then taken back by the London Borough
of Waltham Forest, who appointed a new company, Horizon, to provide
security services for 8-9 months, pending the demolition of the
offices. The EAT said that there was no TUPE transfer of staff from
PCS to Horizon for two reasons.

First, the security services were being provided to two
different clients: Workspace plc and then the London Borough of
Waltham Forest. PCS was engaged by Workspace, and PCS had no
relationship with Waltham Forest. The fact that Waltham
Forest owned the building for which the services were provided did
not mean that there was a single 'client' for the purposes of
TUPE.

Secondly, because the incoming contractor was only appointed
for 8-9 months pending the demolition, this was a short-term
contract which fell into the exemption in TUPE for a "single
specific event or task of short-term duration" (regulation
3(3)(a)(ii) TUPE 2006).

Assign of the times

In Costain Ltd v Armitage, the EAT looked at the
vexed question of assignment prior to a TUPE transfer – was an
employee responsible for managing various projects, including the
contract that was the subject of a service provision change,
'assigned' to the transferring contract? The EAT said that
the correct approach in these circumstances is to

define the organised grouping of employees; and then

determine if the employee was assigned to that grouping.

In this case, the tribunal had fallen into error by conflating
the contract that had transferred and ancillary contracts.
Similarly to the other cases we have reported in this article, the
EAT highlighted how TUPE case law is heavily fact dependent; it
declined to provide any overarching principles on assignment, as
the facts will vary from case to case. The EAT did underline,
however, that

an organised grouping must have an element of conscious
organisation; it cannot be a matter of 'happenstance';

assignment will be a question of fact and not every employee
carrying out work for the relevant client will be assigned;

employees who are carrying out the relevant activities
immediately before the transfer will not automatically be
assigned;

an analysis of the percentage of time that an employee spends
on a contract may be a useful management tool for working out who
is in-scope to transfer, but tribunals (and employers) should not
overly rely on this.

On the facts in this case, Mr Armitage spent 67% of his time on
the transferring contract in the three months leading up to the
transfer; but Costain (the incoming employer) argued that Mr
Armitage was a project manager who became involved on particular
projects on a troubleshooting basis, so his heavy involvement on
the transferring contract did not automatically mean that he was
assigned. As the tribunal had not given sufficient weight to
this argument, the EAT remitted the case back to be reconsidered by
a differently constituted tribunal.

Timing is everything

In Housing Maintenance Solutions Limited v
McAteer, the EAT looked at when exactly a TUPE transfer takes
place. Their conclusion was that the transfer takes place
when responsibility for the management of the business or service
transfers from one entity to another. The facts in this case arose
from a contract for the repair and maintenance of housing
association properties. The housing association terminated its
contract with a company called Kinetic on 9 June 2011. A new
company called Housing Management Solutions Ltd (HMS) was set up by
the housing association, but it did not commence providing services
until 1 July 2011. In the interim period between Kinetic
ceasing to provide services on 9 June and HMS commencing provision
of the services on 1 July, assurances were given to staff from HMS
that they would employ the outgoing contractor's employees. The
issue for the EAT to consider was: when did the TUPE transfer take
place? It found that there was no TUPE transfer when the incoming
contractor, HMS, 'assumed responsibility' for ex-Kinetic staff by
making assurances about their continued employment. The EAT
endorsed the approach of a 2006 case, Celtec v
Astley, and confirmed that the date of the transfer is the
date when legal assumption of responsibility for the transferor's
business transferred. Taking 'responsibility' for staff does not
trigger a transfer, regardless of the intention or the wishes of
the parties.

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The information on this website is of general interest about current legal issues and is not intended to apply to specific circumstances. It should not, therefore, be regarded as constituting legal advice.